Microsoft is set to wipe away over a billion dollars in damages from 2009 patent infringement losses thanks to an outbreak of common sense from appeal court judges.

Microsoft and Alcatel have fought a series of patent infringement battles over the last few years that followed a similar pattern. Microsoft lost in court, Alcatel is awarded obscene amounts of money by a jury that has no idea how to award damages and an appeal court throws out the damages.

There was $1.52 billion awarded to Alcatel for Microsoft infringement of MP3 technology. An appeal judge threw out the damages and the verdict finding that Alcatel lacked standing to sue.

There was $367 million verdict to Alcatel for user interface infringement for tablet PC technology and a date selector in the Microsoft Outlook calendar. The tablet PC patent has been overturned this year by the US Patent Office after a re-examination was requested in 2007.

Patent infringement claims against Microsoft for infringing Alcatel patents for speech recognition and video formats have both been dismissed.

In 2007 when Microsoft was found to violate the MP3 music encoding patent the jury made up an award based on 0.5% of the value of all computers that had Microsoft music players on them – arriving at the $1.52 billion amount. So not just the value of Windows Media Player (which is free) but the value of all hardware in that computer. The appeal court:

held that the jury acted against the clear weight of the evidence in using the value of the entire computer as the royalty base, and thus erred in its application of the entire market rule.

The latest damages are for a minor function in Outlook:

Because the damages award based on the infringing date-picker feature of Outlook is not supported by substantial evidence and is contrary to the clear weight of the evidence, the damages award must be vacated

The damages award ought to be correlated, in some respect, to the extent the infringing method is used by consumers

At trial both parties had a theory for damages, Microsoft had submitted $6.5 million was a fair price but the jury sided with Alcatel who had claimed a share of revenue from 110 million Outlook users, even though they had no evidence those users had used the function. The appeal court has called for a retrial on damages and we are likely to see that $367m (that had climbed above $500m) dropped to around the $6.5m that Microsoft originally asked for.

This could also see a big drop in other Microsoft patent cases.

$290m to i4i for XML save and open functionality in Microsoft Word. Most users don’t use the function and the function is only a tiny part of the overall functionality of MS Word – expect an appeal to knock the zero off that amount.

$388m to Uniloc for patent infringement on software that helps detect whether Microsoft software on a computer is properly licensed. Again Microsoft will argue this is a tiny part of overall software functionality and that the algorithm described is not being used.

The upcoming November trial for patent infringement by Microsoft SQL Server DTS and SSIS for a JuxtaComm ETL patent where Microsoft will be able to argue that not all SQL Server customers used DTS and that it was just a small proportion of SQL Server functionality – potentially cutting damages in that case from 100s of millions to 10s of millions.

These four cases alone could see $1 billion dollars of damages wipe away – plus the untold billions of damages from patent infringement cases that will never see the light of day. The removal of this cash cow – of taking a tiny infringement and blowing it up into major damages – will prevent many patent holders from going ahead with trials that take 3-10 years to complete. Look at Alcatel – half a dozen trials over six years with almost every claim being systematically removed or whittled down by appeals and patent re-examinations. What does Alcatel have to show for all this now?

In the past several years, courts have somewhat weakened patent rights. Three cases have been particularly important: (1) KSR v. Teleflex ( making it easier to find an invention unpatentably obvious); (2) In re Seagate ( making it more difficult to obtain enhanced damages for willful infringement); and (3) eBay v. MercExchange ( making it more difficult to obtain permanent injunctive relief to stop ongoing adjudged infringement). In its appellate brief, Microsoft pushes hard on these buttons – explaining their view that the district court misapplied the law.

And the frustration from parties such as Microsoft at judges who allow insane jury findings that are not supported by evidence or law and have to be thrown out by an appeals board a year later:

And after the jury has rendered its verdict, it is the judge who, before allowing that verdict to become an enforceable judgment, must ensure that the verdict is adequately supported by the evidence and supportable under the law.

The JuxtaComm versus Ascential Et Al is due to be tried in Texas this November and could be one of the first software patent infringement trials to run under this new definition of software damages. Microsoft and IBM remain just two of a dozen companies who did not settle in this case – though settlement talks are being finalised with SAP-Business Objects. These settlement terms may need to be redrafted as SAP will want to rewrite the calculation of damages around products such as NetWeaver.

Microsoft usually settles these type of cases – where the infringement is obvious – but in this case they don’t have to worry about injunctions, they are unlikely to get much if any wilful infringement loading and now they are looking at a smaller damages calculation. They may decide to fight this one out.

This doesn’t help big infringers – in the JuxtaComm versus Ascential case IBM is accused of infringing for it’s DataStage product. DataStage is a standalone ETL tool that is almost perfectly described by the definition of the patent by the judge. There is no way to claim it is a minor part of the product. Patent holders such as JuxtaComm may still be able to get a big share of revenue where the primary function of a product infringes a patent and is demonstrated to be used by most customers.

"Good news by mid-October (latest). Only one will go to trial, but it will not go to completion. Some feel they have to look like they put up the good fight. Tradition and such. Same result different approach. With one of them it is just about how much. "

"$100.00, next AGM, says we NEVER go to trial with either IBM or MS. Give your head a shake, you think these last desperate attempts to derail the settlement talks is going to have any effect? I think not! Worst case they settle up on November 9th at 9 AM as court convenes at 10. "

"47 days and counting. If Sam008 - younger brother of James007 is right, and he’s pretty silent right now, then there will be no trial. But then again he thinks it’s worth about 5-6 bucks a pop, tops. So go figure. We shall see, won’t we.
RMB "

"OMG. LL...you ARE getting very touchy lately. What a bunch of crap you have posted while I have been away. Still don't understand why you are even here since you have no money invested but, to use one of your commonly used words, whatever.

"You ARE verbose LL, and I'm not saying it's a bad thing.. obviously your sense of humor is a little testy these days.. and oops, my bad, I misspelled the word, normally I catch my errors. Nuts, you got me this one time. ;)

"
My understanding is that if an application for a patent demonstrates a significant improvement in the old patent process - a new patent will be granted.

This is correct - with the caveat that only the improvement itself is patented by the new patent, not the previously known process that it ostensibly builds on. '662 is silent about the prior art in InfoPump, so it can't explicitly distinguish itself from InfoPump.

Someone upthread or in a previous thread made a performance claim, but that's not in '662. A ""data bag"" to handle metadata is certainly a novel
term. I think it's an obvious use of any structured computer language, but even if I'm wrong, it's such a narrow novelty that it's possible no other product infringes on it. "

"My understanding is there is a significant difference between our ""patent process"", and the InfoPump software. Because our patent is for a ""process"" that is different than InfoPump that fact that they accomplish something similar is not relevent to granting of the patent if the process is distinctly different.

My understanding is that if an application for a patent demonstrates a significant improvement in the old patent process - a new patent will be granted.

Tort –noun Law.
a wrongful act, not including a breach of contract or trust, that results in injury to another's person, property, reputation, or the like, and for which the injured party is entitled to compensation.

"You don't actually know what you're talking about, CP, so you'll just have to keep right on trying to spread your ignorance. Go for six!

Perhaps I was too brief: Prior art can void a patent. The claim that IBM is making is that InfoPump, which IBM does not own, voids the '662 patent in such a way that IBM's own products' infringement is not tortious.

That's how patent law works in the U.S., which is different from how it works in Europe (and possibly Canada, I don't know). This case is before a U.S. court, remember?

How many downs does a football team have to gain a first down? When we're talking about the NFL, there's one true answer, and no one cares about the CFL (not even those who were happy that Doug Flutie won several Grey Cups). "

"
If there is prior art, that program and that program alone should be discounted, but anything else that was used knowing the pat. was ours should be willful if the pat. is dated later than ours. I'm not sure how they can argue that.

They can argue that because that's the law. The prior art would void the patent. "

"If there is prior art, that program and that program alone should be discounted, but anything else that was used knowing the pat. was ours should be willful if the pat. is dated later than ours.
I'm not sure how they can argue that.
Maybe the prior art was sold knowing they where infringing because the didn't apply for a pat. "

"If there is prior art, that program and that program alone should be discounted, but anything else that was used knowing the pat. was ours should be willful if the pat. is dated later than ours.
I'm not sure how they can argue that. "

"Wait.. so Microsoft was in discussions with JuxtaComm, and because they suggested they had the option of a buyout as an alternative to a license agreement, they want to say that they could still use what they knew was infringing because they didn't like the price?

"Strange, the motion to dismiss Informatica was filed on the 5th and 17 days later it still has not been granted. Something in it the judge doesn't like?
Most of the latest Pacer documents are sealed and deal with attempts by the defence to get off or reduce damages. The Microsoft non-willful infringement was not sealed, the JuxtaComm reply was sealed and now the Microsoft reply to that reply is not sealed. Microsoft says when JuxtaComm approached them and other vendors they were not trying to license the patent but were trying to sell the company:

At the end of its brief, JuxtaComm presents a set of purported facts that it believes support its argument that Microsoft was subjectively reckless. Microsoft has presented many facts that refute this theory in its opposition to JuxtaComm’ s motion for summary judgment on equitable issues (See Docket No. 679), namely that JuxtaComm was pushing for the purchase of an unprofitable company for exorbitant amounts of money, rather than seeking a fair licensing arrangement.

And any reasonable person would conclude the patent was not valid:

Without any argument that InfoPump does not invalidate the ‘662 patent, an objective actor would have had no difficulty in deciding to continue selling the accused software. The strength of this art (and the absence of any rebuttal) demonstrates that Microsoft’ s alleged infringement cannot be willful.

Since JuxtaComm has offered no evidence of objective recklessness, much less the clear and convincing evidence that is required, the Court should grant Microsoft’ s motion for partial summary judgment of no willful infringement.

"Noodles, appreciate your comments but quite honestly not at all trying to be a snake in the grass and do not even know who Cobalt or anyone else is.

More than anything I am hoping that TH management or one of you, will come up with some concrete factual documents signed by the executive, that give valid answers to information discrepancies that we have been asking for over the last few months.

All of this concern and unrest is only a big deal because of management’s recent change in attitude toward shareholders. We used to mean something however now that money is finally coming in, we are being shunned for asking for clarification.

I look forward to seeing any written, signed (by TH) paper that you or the company has to offer us that will put all our concerns to rest.

As with an investment it is always best to monitor it and not just put your head in the sand and ""hope"" it works out. Hope is not an investment strategy.
"

Which is saying we did infringe but we were unaware of our culpability??? Right??? We might be on to something. After all Vincent was convinced that both MS and IBM were in the process of settling - albeit in little teensy weensy steps.
RMB

"blinkin,
you just can't see it can you. Clare's is a classic. If your wife never speaks to you for 10 days when you pick your nose, and she hasn't spoken to you for 10 days, whats the logical conclusion? you picked your nose again, dummy. "

"Holy crap, once again this blog digresses. Why dont some of you give your keyboard a break. If you have nothing constructive to say regarding the case, regardless of which ""side of the fence"" your viewpoint or information leans towards, just please restrain yourselves. Some of us want only the info, good or bad, and not to sift through hours of bitching and mindless drivel. PLEASE!! "

Here here Noodles!! I believe that that dishonest people see dishonesty in everyone...perhaps a way of being able to sleep at night or look at themselves in the mirror...what do you think ben_dover/cobalt?

"Nothing yet from SAP, Informatica have settled and been dismissed, IBM and Microsoft are fighting on with lots of motions but it's not too late for them to pull out. Latest update on the case is at
Informatica Settles – A Patent Trial is no Country for Small Vendors including some info from the Proposed Pretrial Order Joint Final Pre-Trial Order by International Business Machines Corporation, Microsoft Corporation, JuxtaComm Technologies, Inc., Ascential Software Corporation. "

As for the other prognostications on the blog, just think of making fine wine...and of course the time it takes. You rush it and it's $2 Chuck, do it right and it's a top Chardonnay. This wasn't rushed, and the outcome will flow fine.

The Big Show starts in 6 weeks. Anything can happen up to then, and of course if this goes to trial,
the bigger they are the harder they fall. Remember the last word, as they still
fall. "

I have been watching since May '09... finally something of substance! Steak medium Rare and beer... perhaps vino after the sun sets.

RMB I would love to share the fruit from your farm but let the westerners bring the steak. wear your name tag. Lol!

Largest pat. lawsuit ever! nobody say a word until it's done. (if you actually know anything) paraphrasing AG.... as it should be. I would love to hear from Vincent or steelhard. They post when there's something to post about.

"For all you guys who want to treat this as a simple fight between the local hardware merchant and the cafe owner consider the dynamics at play: the egos of the lawyers and the defendant's lawyers having to eat crow (eg. go back five years when one defendant could have bought the company for--say 500M-- and on the legal advice they tell the company not to buy or settle because we can beat the crap out of this little guy and get it for 10 percent of that. Now this same law firm is going to go to the company and say we messed up; we should settle for much more than that. I doubt it). Or, if not the lawyers then the Department head who nixed a settlement/buyout years ago and now has to walk into the Boardroom and proclaim that he has just struck a hell of a deal and it is only going to cost us two B more than we could have escaped with only a few years previous. Besides the money, these are some of the real things that get in the road to sane solutions. "

"I'm not in the game, but if I was, I'd fold. Just to clarify, do you mean a trial that goes the distance, or one that starts and they cave in when they realize they are going to lose. Sorry LL but they will. "

You really need to go back and read your last post ... it's a classic! Your best response to those who think that management may be screwing them over is, ""I never saw the gag order either but it's self evident there is one by the actions and statements from management"". And you wonder why people question your impartiality in all this ...

"I'm not sure why some of the naysayers are so sure there is no gag order. I never saw the Titanic sail but I'm sure it did as the evidence is on the ocean floor. I never saw the gag order either but it's self evident there is one by the actions and statements from management. Course maybe its just a big conspiracy to defraud us all, that coming from the guys who did no due diligence and are now looking for reasons to compare TH to the latest Calgary ponzi scheme which is like comparing apples to beavers. "

"ben_dover>
You, Sir, are a snake in the grass spewing venom in the hope it will infect the minds of other shareholders just as it has infected your mind. You, Sir, have my sympathy - it must be awful to live everyday with the great suspicion you must carry of your fellow man. The whole world is not dishonest, and I know you will have a hard time believing that fact!

I, and I am sure many other investors with larger investments than mine, did our due diligence before investing - didn't you?

I am just an investor, not related to anyone at TH, but I am impressed by the tenacity of TH managment and support them 100% until I have some reason not to. Sure, they have made some mistakes - but they have recovered and carried on to maximize the return on our investment, large and small. I have been in since the beginning and my confidence in TH management has waivered from time to time - but not now. AG has given them a game plan, and they are sticking to it.

Take a happy pill, or a stiff drink, and try to look at the upside - at least until you have some reason to believe otherwise, not based upon suspicion and inuendo.

"Interesting write up in the Calgary Sun on Thursday, September 17th, 2009.

The article is regarding the latest investment scam in
Chestermere and the suicide of a woman who lost her money.

Bottom line;

When a distraught investment victim went back to the investor relations individual of the Chestermere company to question what went on, the response they got was, you should have done your due diligence.

This is becoming a common response we hear after investment events go bad.

What is more concerning for us the shareholders of TH is that our investment has not even gone bad yet and TH management has already told many of us “We are a private company, shareholders have no say, and you should have done your due diligence before you invested”.

What does that mean for us TH shareholders considering we all know the outcome of TH corporate activity, more specifically the patent litigation, will without question, be a huge success?
"

"Geez Ben,
I wouldn't go so far as to say a ""management control plan from the onset"". If management and shareholders could communicate on some level I'm sure a resolve could be reached quite easily. A little transparency and reasurance from TH is all that is needed. If we know all is on the up and up then no more shall be said about it. "

"I believe the 2008 Financial Report indicates there was a total of 108,000,000 shares outstanding!

For the purposes of this analysis we will assume that management has not taken their 10% + 15% off the top dollars and exercised the additional 20,000,000 share options they granted themselves.

You may be interest to know that there are well in excess of 1,600 shareholders in this company.

Of the 108,000,000 shares outstanding, we understand that management individually and within numbered and other companies they set up, hold upwards of 20,000,000 shares.
Of these ~20,000,000 shares, how much do you actually believe they paid for these shares if anything at all? You can bet it is nowhere near what we paid!

Continuing with our assessment of the situation;
Therefore there are ~ 88,000,000 shares held by us, the + 1,600 outside shareholders.

On average that equates to less than 100,000 shares per shareholder, does it not?

Wonder how that happened considering the rules were you had to be a sophisticated investors or be investing no less that $97,000.00

I am disappointed, here I thought they were breaking the rules just for me cause I was special, so I got in for much less than the $97,000.00 minimum as an unsophisticated investor.

This all sounds like too much of a management control plan from the onset.

Perhaps their thinking was that if you get numerous investors putting in smaller amounts, after waiting for years they will just right it off as a bad investment and walk away leaving management to do whatever they want, how they want and there would be no questions asked.

I guess they never thought that we would all continue our confidence level in the huge financial outcome of this venture, and be asking when are you guys going to live up to your commitments you made to us, the outside shareholders?
"

"Jim,
I'll give you that the communication could have been better through the years. A little more transparency would always be nice. I don't think an official 'gag order' in the legal sense has ever been enacted, but AG has communicated to TH that they are to say 'no comment' with regard to the litigation and anything associated with it.
I agree that a quarterly update to shareholders would not be out of line even if it says 'no comment'.

I don't believe that there is any intention from executive to mislead investors or keep secrets. I think that with being so close for so long to a payday, even the executive expected to be having a payday and party by now that would alleviate investor concerns and show that everything is on the up and up. Unfortunately, I think AG have had other plans, that nothing will happen in the party front until the first 12 are dealt with completely.

Hang in there, we're still in good shape.
An AGM will deal with the executive compensation and bonuses. And yes this can be dealt with at that time and not while in the heat of battle.

"HH ,
Lol, I see what you mean, but no, just little 'ol me.
The information some of us are asking for in no way can be considered confidential or sensitive to the litigation. Or at least it shouldn't be. The way I see it, this so called ""gag"" order was created on this blog and it is used by those who wish to keep the answers to legitimate questions from being addressed. Why? What's it cost to call a special meeting and address these concerns? What sort of time would it take out of one's day to post an explaination to the loyal shareholders? We deserve more than an 18 month old newsletter that simply says "" our hands are tied"". I think it is arrogant on management's part to treat us like friggin' strangers. I'm sorry, but that's the way I feel right now. Win or lose, this was not handled properly, in my opinion. "

" I don't recall ever seeing this ""gag"" order that a few like to use as a crutch everytime a valid question concerning TH's plans for bonuses and the such is asked. Probably because it doesn't exist. I only remember a news release on the TH site dated Feb. 12, 2008 which reads:

""We have received requests from shareholders interested in obtaining information about the Texas Litigation.
JuxtaComm is not in a position to provide any information at this time because of the confidential and sensitive nature of the ongoing negotiations.""

No mention of being under any order from AG be it ""gag"" or any other type of order for that matter. It simply states they are in no position to speak about litigation matters. No one is disputing that! I don't want to talk about anything concerning litigation until it's done and over with. I want to hear what, if any, plans they have made concerning bonuses and share options. And once again, for the umpteenth time, plans for board member bonuses and options are not even remotely related to any information about the Texas litigation. "

"noid,
I support them too but am not related nor employed in any way. I like your points but you didn't mention the fact that they are doing exactly as A/G has directed them thus the silence while they are maligned and defamed here by various posters who purport to know much more than they do and who think they know better than the legal team. "

"It's my understanding that the 138 billion dollar figure was the total sought after from over 200 companies. We have only gone after 20 some odd companies (condensed to 12) so far. I feel that 138 B, even for all 200+ companies, is highly exagerated but we should have a pretty healthy return on these first 12 in any case. I hope Noid is right with the $25 and up guestimate, but doubt it. "

"uh, nope, I don't think so. I support TH management and their actions but I'm not management (or a friend or relative or Scott whoever? that Sam says I am). The reason that I support them is that they brought the shares I bought at less than a dollar, to a minimum of $25.00 by your estimate, on the low side (and it is low!). I'll be a multi millionaire by year end as well. Should I go on? "

Isn’t it amazing that when asking those questions 6 months ago, TH management had all kinds of answers for you?
NOW, they don’t know you, they don’t want to see you, and they won’t talk to you!

Anyone posting on this blog in support of TH management and their actions; is TH management!

You should also realize that announcing some findings in a public forum may not be in shareholders best interest.
What IS in shareholders best interest; is to keep pushing management for the answers to our questions:

WHEN?
HOW MUCH?
WHAT THE “H” IS GOING ON?

Any response from management that does not guarantee a minimum of 70% of the litigation revenues to date (no MS or IBM included), with a cheque in your pocket equating to in excess of $25 / share in the next 30 days, IS NOT ACCEPTABLE.
Just do the math!

An understated $138 B valued up to 2007, with an average recovery at 8%, and then tack on extra for (without predjudice), one time only final settlement and 50% of those dollars have already been settled!

$25 / share right now back to the shareholders would be a joke! $38 / share might be closer to the truth!
"

Of course they didn't find anything "real" or it would have been sent to all the shareholders...that IS what he said he was going to do. There is nothing...he is a fear monger and nothing else...a troll sent by one of the defendants to subject us to fear so that we may panic and inadvertantly say something that could help their case...damn good thing the gag order is in place and we truly do know NOTHING about anything or some poor chap would be spilling beans and ruining everything...if there were beans to spill...lol

"You're asking Cobalt!?? and he what?? has knowledge of managements plans? oh yeah sure, he's got the inside track as he's an employee? board member? a close friend? If I want to hear from Cobalt I'll buy a can of beans, eat em and wait. No sense dragging him back to the blog. "

"Cobalt
Once you talked with such conviction of wrong doings and now you don't say anything. We are less than 2 months away from D-Day and you are still silent. I had hopes that you might clarify your position on management's plans for money distribution at some point, but it seems you may have hit a dead-end. So are KP, ""et al"", straight up or what? "

I don't know how often freecourtdockets is updated but MetaStorm were dismissed from the case a few months ago after a undisclosed settlement and I don't think Informatica or Business Objects have been officially dismissed yet.